PR firm settles with FTC over alleged App Store astroturfing

The FTC and Reverb Communications have reached a settlement over allegations …

Public relations agency Reverb communications, hired by iPhone game developers to promote their App Store offerings, has reached a settlement with the FTC over accusations that company employees posted positive reviews for the games the company was hired to promote. The FTC levied charges against Reverb for violating rules that require the sellers of products and those posting information about the products online to disclose any connection they might have.

The FTC first began looking into practices of "stealth marketing," which seeks to build product buzz via blogs, social media, and word of mouth by quietly paying "ordinary" people to promote the product, in late 2006. Eventually the FTC imposed new rules in 2009 that require anyone writing about products and services online to disclose any financial connection with the sellers, including "payment in kind" of free products or other gifts. These rules also apply to public relations and advertising agencies hired by the seller.

"Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising," said the director of FTC's Division of Advertising Practices, Mary Engle, in a statement. "Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers."

An FTC investigation revealed that paid employees of Reverb were posting positive reviews of games on the App Store "using account names that gave readers the impression the reviews were written by disinterested consumers." Those reviews did not reveal the fact that Reverb received a commission—often a direct percentage of sales of the games in question—from the game developers, and positive reviews can often mean a big increase in sales on the App Store.

The settlement requires Reverb to remove any reviews or other endorsements for its clients' products that do not disclose the company's connection to the sellers. Reverb is also barred from "misrepresenting that the user or endorser is an independent, ordinary consumer" in the future. The FTC can levy fines of up to $11,000 per alleged rule violation, so the settlement appears to be nothing more than a slap on the wrist. When the new rules were revealed last year, the FTC said it would focus on issuing warnings, using fines as a last resort against repeat offenders.

Reverb agreed to the settlement terms, though the company maintains that it disagrees completely with the FTC's allegations and admits to no wrongdoing. "During discussions with the FTC, it became apparent that we would never agree on the facts of the situation," Reverb said in a statement released to MTV Multiplayer. "Rather than continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter, we settled this case and ended the discussion."

While paid advertising masquerading as legitimate editorial content is a real problem, the FTC's disclosure rules have drawn some criticism. The Interactive Advertising Bureau suggested last year that the rules were unfair, since they place tighter restrictions on online outlets than traditional print media. The group also suggested that the rules raise First Amendment issues.

Those criticisms aside, the question remains—how would consumers feel knowing that the review for an iPhone game they just read was paid for by a marketing company? Since knowing that fact can make a material difference in whether the review is trusted, and therefore may form the basis for a purchase, consumers have a right to know.

Still, Reverb's potentially unfair influence on App Store buyers may not be that great. As MTV Multiplayer pointed out, only those that have downloaded a game from the App Store can review it, so it would take serious effort and a lot of paid reviewers to influence its overall rating. If a game is truly awful or truly amazing, the ratings will reflect that fact.

Yea, 500-750+ positive reviews are usually 'safe', but even then I want a demo. I think iTunes should offer a demo period of an app even if it's just 5 minutes, but then we have to worry about the pirates. Oh well, buyer beware right? I thought Obama was going to unite us.

Reverb's website homepage seems to be turned off, but you can access other parts of their site... weird. Funny thing is after this story they'll need their own PR as a Google search for their name shows tons of articles about their tussle with the FCC.

I used to work in PR but we'd never do something like this. Talk about bad karma.

This is why I love the 24-hour return period on the Android market. Typically there are free versions that either expire or have ads/limitations so I can at least see if it does what I want it to. Generally if I end up using the app all week I buy the full version. Sometimes I buy it within an hour of testing because I really like it and want to support the dev. In the odd case where there is only a paid version, I am much more likely to buy if I know I can return it within 24 hours if it doesn't work on my ROM or it doesn't do what I want it to. The whole piracy argument is kind of pointless since there are easy ways to do that regardless.

Do you see that, Ars commenters? THOSE are shills. Not every person who has an opinion different than yours. Not anyone who expresses anything less than complete contempt for Big Content, the government, the RIAA or MPAA, or does not swear a lifetime of allegiance to the EFF.

Do you see that, Ars commenters? THOSE are shills. Not every person who has an opinion different than yours. Not anyone who expresses anything less than complete contempt for Big Content, the government, the RIAA or MPAA, or does not swear a lifetime of allegiance to the EFF.

The app store? Ummm who cares? Doesn't FTC have better things to do, such as reining in the blatantly false advertizing that's so pervasive on national television? My dentist wrote his own online reviews. That's worse than some stupid iPhone apps, and no one did anything about him.

Astroturfing is a fairly big problem, but the reason they were persuing this is because it was open and shut. It's a bit harder to show how a solar powered fan in a cracked window doesn't really lower the temp of your car or that the people making a national brand cleansing bar wiped Crisco on a shower door while claiming it was regular soap to show how the water beads off of it (was it Zest or Dove?). Try it at home, water doesn't bead off of soap because lowering the surface tension is what MAKES it soap.

PR companies know that to sell a product, you have to bend the truth a little... like about 180 degrees. Sometimes it's less of a matter of lying and more a matter of just not telling the truth, like claiming your koolaid is healthy for people by calling it Vitamin Water. Or that Animal Crackers are good for your kids because they are crackers, and obviously not cookies. Or that your tires have zero death cystals.

Shoot, my store brand coffee creamer even does it. The regular coffee creamer has 40 callories per service and the low fat one has 10 callories per serving. Regular is 4 teaspoon serving and the low fat is one teaspoon serving. Yep, less fat, same amount of callories.

The current problem isn't just astroturnfing, it's every PR firms belief that they should be allowed to get away with saying and doing anything they want because they've been paid to do market a product. It doesn't give them carte blanche to lie or plant reviews, or to pay people to change their bad reviews.

This happens on the iOS App store as well... an app will be created by a dev house for a third party and then all these mysterious reviews of 5 stars show up, even in between legit comments that point out massive deficiencies.

Ask the Butcher for example, a thinly veiled advertising app for a Sydney butcher, has many dubious reviews there. They just don't "smell" right

That similar practice is happening on the Android market is quite unsurprising really.

i dont trust user reviews until the number of reviews enter into something that i think goes beyond reasonable amount. smaller the company the more likely i feel it will happen.

i suspect this kind of stuff even happens on Hulu, when small independent movies go online to rave reviews and a little too much intellectualization.

I remember there was an article on one of the tech sites a couple of years ago where author gave the details of how his firm would go into blogs, user review areas, forums, and so forth, and post whatever sorts of things the "client" wanted them to do. For a handsome fee of course. So it does happen. Now that the FTC is onto this stuff, hopefully that means it will happen much less.

I hate the "let's make a deal" approach to justice. They either did something wrong and should pay a fine big enough so they don't do it again, or they did nothing wrong and shouldn't pay anything. But in the current state of affairs it's too stupidly expensive and time consuming to sort the two. So we get this "I did nothing wrong but here's some money so you go away" bullshit.

Really, it's a symptom of a legal system that's become, via the collective self-absorption of the legal professions, a means of transferring wealth to lawyers, rather than of dispensing justice in a timely and efficient manner. Much the way the financial system has become focused on rewarding the players rather than allocating capital.

The current problem isn't just astroturnfing, it's every PR firms belief that they should be allowed to get away with saying and doing anything they want because they've been paid to do market a product. It doesn't give them carte blanche to lie or plant reviews, or to pay people to change their bad reviews.

Yep, I know, what I call "legacy" PR that is based on broadcasting a message is just flawed. It is time for a switch to two-way communication with candor and honesty.